Alderman, activists gather to support residential hotels

A City Hall news conference about an ordinance that would protect SRO housing drew Chicagoan supporters together Wednesday. Ald. Walter Burnett was among others who spoke in support of the moratorium.

A City Hall news conference about an ordinance that would protect SRO housing drew Chicagoan supporters together Wednesday. Ald. Walter Burnett was among others who spoke in support of the moratorium.

Mary Ellen PodmolikTribune reporter

Aldermen and community activists gathered at City Hall Wednesday morning before the City Council meeting to voice support for efforts to maintain housing for very low-income residents.

A proposed ordinance introduced Wednesday by the city and aldermen would effectively quash the redevelopment of single-room-occupancy and residential hotels for at least six months. The proposal would prevent almost all conversion projects, whether it was to a residential, non-residential, commercial or industrial use. Building permits still be would issued for routine maintenance and improvements.

"We believe in development without displacement," Ald. Walter Burnett, 27th, a lead sponsor of the effort. “We don’t want to replace one type of people with another type of people.

Burnett’s ward includes some residential hotels but for him, the issue is personal as well. His cousin lives in a single-room-occupancy hotel on the city’s north side, a building he characterized as a decent place to live.

“There are so many people in the city of Chicago who need this type of housing,” he said. “Without this housing, they would have nowhere to stay.”

There are 81 licensed properties within the city, and the challenge during the next few months will be to identify other properties that are operating without a license, Felicia Davis, the city’s building commissioner, said after the news conference.

Discussions during the next several months will include building owners and developers, aldermen, consumer advocates, and various city departments, including the law department.

In 1985, a New York City law established a five-year moratorium on the demolition or conversion of such buildings unless a developer paid $45,000 per unit or proved it couldn’t make a reasonable profit from the property. Four years later, the N.Y. State Court of Appeals ruled the law was unconstitutional. The U.S. Supreme Court declined to take up the case.

Chicago is searching to see what financial incentives it can offer both existing owners who want to improve their buildings as well as to developers so they will keep at least a portion of the buildings dedicated to very-low-income residents.

During the past three years, more than 2,000 rooms in residential hotels in neighborhoods throughout Chicago have been converted to market-rate housing. Another 6,000 units are at risk, according to the city.

Since the 1980s, Eric Rubenstein has owned three single-room occupancy hotels in the Uptown, Edgewater Beach and Austin communities, where the rents range from $450 to $525 a month. His buildings are 95 percent occupied.

In an interview, Rubenstein has no plans to sell his buildings but he understands the lure of others selling to developers who convert the buildings to market-rate apartments with rates twice as high.

If he did sell, he said "a lot of (residents) would wind up on the street because there are so few options."

For a financial package to adequately compensate building owners who keep a property very affordable, it must include exemption from state and local taxes, free water, full property tax rebates and forgivable loans to buy and renovate properties, Rubenstein said.